Vietnam property major Novaland incurs worst half-year loss since listing

Major real estate developer Novaland recorded an audited net loss of nearly VND7.33 trillion ($297.7 million) in H1/2024, marking its worst half-year performance since listing in 2016, according to a post-audit earnings report.

This result was a significant reversal from the VND345 billion ($14.02 million) net profit that the company had initially reported in its unaudited financial statement.

The firm, listed on the Ho Chi Minh Stock Exchange as NVL, attributed the great disparity to auditors’ proposal to set aside VND4.3 trillion ($140.5 million) in provision for land rent, land use fees payable and late payment of land rent for the 30.1-ha Lakeview City urban area in Ho Chi Minh City.

Auditors also proposed adjusting financial revenue down by VND2.99 trillion ($121.5 million) and other income by VND55 billion ($2.23 million) due to contract violations, for which due amounts had not yet been collected as of June 30. However, by the time the financial statements were issued, these amounts had been fully recovered, the company asserted.

A downward adjustment of VND268 billion ($10.9 million) for inventory price reductions and other expense adjustments were also made.

With a struggling property market, Novaland has been facing increased short-term liquidity pressures due to its financial losses, upcoming debt obligations, and limited ability to mobilize fresh capital.

The company has defaulted on several loan packages, including a VND2.44 trillion ($99.3 million) short-term loan from Credit Opportunities III Pte. Limited, a VND2.23 trillion ($90.8 million) loan from Seatown Private Credit Master Fund, a VND1.85 trillion ($75.34 million) loan from Credit Suisse AG's Singapore branch, and a VND942 billion ($38.28 million) loan from Stark1st Co. Ltd.

This has raised concerns about Novaland’s ability to continue operations and successfully execute its strategic plans, according to auditors.

Novaland has said that it has reached agreements with some lenders to restructure loans totaling VND17.33 trillion ($704.4 million). The company also plans to sell assets valued at VND25.43 trillion ($1.03 billion) to meet its financial obligations. In the first half of the year, it offered 15 assets for sale, one of which sold for VND1 trillion ($40.63 million).

The developer has also asserted that it is taking steps to generate sufficient cash to maintain operations. In the first half of the year, delivery sales amounted to VND1.89 trillion ($76.8 million), a 37% increase year-on-year. The company expects to deliver 2,600 products in the second half of the year.